eBASE Co.,Ltd. FY2027 Q1 Earnings Report

Quick View

Executive Summary

The Company recorded higher revenue but lower earnings for the quarter, with revenue growth offset by increases in selling, general and administrative expenses and the effective tax rate. Revenue was ¥1.16B (¥1.07B in the same period of the previous year, YoY +7.9%), Operating Income was ¥0.13B (YoY -12.2%), Ordinary Income was ¥0.14B (YoY -8.2%), and Net Income attributable to owners of the parent was ¥0.08B (YoY -24.2%). While the core eBASE-PLUS Business drove double-digit revenue growth, higher SG&A expenses and an increased tax burden weighed on earnings, causing the decline to widen from the operating income level through to the net income level.

Factors Affecting Business Performance

【Revenue】
Revenue was ¥1.16B, representing a YoY increase of +7.9%. By segment, the eBASE-PLUS Business led growth with revenue of ¥0.72B (62.1% of total, YoY +10.1%), supported by growth in cloud services and IT development outsourcing. The eBASE Business also maintained revenue growth at ¥0.44B (YoY +4.8%).

【Profit and Loss】
The gross profit margin was 43.1%, largely unchanged from 43.0% in the previous year. However, the SG&A ratio rose to 31.9% from 29.3% in the previous year, an increase of +2.6pt, resulting in Operating Income declining to ¥0.13B (YoY -12.2%). Ordinary Income was ¥0.14B (YoY -8.2%), supported by ¥0.01B in non-operating income, including dividend income, resulting in a smaller decline than at the operating income level. Meanwhile, the effective tax rate increased to 44.8% from 33.1% in the previous year, causing Net Income attributable to owners of the parent to decline to ¥0.08B (YoY -24.2%), with the decline widening further. Overall, the Company recorded higher revenue but lower earnings, as increases in expenses and the tax burden pressured profits.

Segment Analysis

The eBASE-PLUS Business generated revenue of ¥0.72B (62.1% of total, YoY +10.1%) and segment profit of ¥0.119B (86.1% of total segment profit), strengthening its position as the core business in terms of both revenue and earnings. The eBASE Business generated revenue of ¥0.44B (YoY +4.8%) and segment profit of ¥0.019B (13.9% of total segment profit), remaining less profitable than the eBASE-PLUS Business. During the quarter, KSP-SP Co., Ltd. became a consolidated subsidiary under the eBASE Business, and goodwill of ¥0.297B was recognized. The concentration of profits in a specific segment increases the impact of demand trends in that business on the Company-wide results.

Key Financial Indicators

【Profitability】 The Operating Income margin was 11.1%, down -2.6pt from 13.7% in the same period of the previous year, while the Net Income margin also declined by -2.7pt to 6.6% from 9.3% in the previous year, indicating deteriorating profitability despite higher revenue. ROE remained at 1.1%. 【Cash Quality】 Accounts receivable declined by -29.7% to ¥0.66B from ¥0.94B in the previous year, suggesting improved collections or a change in the timing of revenue recognition. 【Investment Efficiency】 Total asset turnover for the quarter was approximately 0.15x, while ROE was 1.1%, indicating low capital efficiency and an area requiring monitoring alongside improvements in profitability. 【Financial Soundness】 Although the Equity Ratio declined by -2.0pt to 89.0% from 91.0% in the previous year, it remained high. Cash and deposits of ¥4.34B substantially exceeded current liabilities of ¥0.80B. The current ratio was 653%, and the Company maintained a virtually debt-free financial structure with almost no interest-bearing debt.

Cash Flow Analysis

Cash and deposits were ¥4.34B, down -12.5% from ¥4.95B in the same period of the previous year, indicating movements in the use of funds. Factors behind the decline included the recognition of ¥0.297B in goodwill accompanying the consolidation of KSP-SP Co., Ltd. and progress in tax payments resulting from a decrease in accrued corporate taxes and other taxes (¥0.18B in the previous year → ¥0.08B in the current period). Meanwhile, accounts receivable declined by -¥0.28B to ¥0.66B, and progress in collections is considered to have contributed positively to cash generation. Overall, M&A investment and tax payments preceded other cash uses, somewhat reducing cash on hand. However, the impact on financial soundness was limited, and cash and deposits remained substantially above current liabilities.

Earnings Quality

The gap between Ordinary Income of ¥0.14B and Net Income attributable to owners of the parent of ¥0.08B was primarily attributable to the increase in the effective tax rate (44.8%, compared with 33.1% in the previous year); no temporary factors such as extraordinary gains or losses were identified. Non-operating income was ¥0.01B, consisting mainly of dividend income and interest income, and was recurring in nature. Comprehensive income was ¥0.09B, approximately in line with Net Income attributable to owners of the parent. Excluding +¥0.01B in valuation differences on other securities, there was no significant divergence, and factors raising concerns regarding earnings quality were limited. From an accrual perspective, accounts receivable declined by -29.7% from the previous year, and the somewhat earlier improvement in the timing of revenue recognition and cash collection suggests the soundness of the cash flow supporting earnings.

Earnings Forecast and Guidance

Progress against the full-year Company forecast was 21.4% for Revenue (¥1.16B/¥5.40B), while progress for Operating Income, Ordinary Income, and Net Income was lower than revenue at 8.4%, 8.6%, and 7.1%, respectively. The full-year forecast is Revenue of ¥5.40B (YoY +2.7%), Operating Income of ¥1.54B (YoY +7.6%), and Ordinary Income of ¥1.60B (YoY +9.0%). As of the current quarter, there were no revisions to the earnings or dividend forecasts. The delay in earnings progress appears to reflect the back-loaded full-year plan, as well as front-loaded SG&A expenses and a higher-than-expected effective tax rate in Q1. Trends in expenses and the tax rate in the second half will be key to achieving the full-year targets.

Shareholder Returns

The year-end dividend forecast for the fiscal year ending March 2027 is ¥15.20 per share, comprising an ordinary dividend of ¥12.20 and a commemorative dividend of ¥3.00 for the Company’s 25th anniversary. Based on forecast EPS of ¥24.34, the Payout Ratio is approximately 62.4%, or approximately 50.1% on an ordinary-dividend basis excluding the commemorative dividend. There has been no revision to the dividend forecast as of the current quarter. Treasury shares represent approximately 6.8% of issued shares (3.22 million shares). Given cash and deposits of ¥4.34B and a virtually debt-free financial base, the Company has sufficient capacity to pay dividends.

Risk Factors

1. Dependence on a specific segment: The eBASE-PLUS Business accounts for 62.1% of revenue and 86.1% of segment profit. Changes in demand trends and the competitive environment for this business could therefore have a significant impact on Company-wide performance.

2. Pressure on earnings from the higher effective tax rate: The effective tax rate for the quarter rose to 44.8% from 33.1% in the same period of the previous year, widening the decline in Net Income (-24.2%) relative to the decline in Ordinary Income (-8.2%). It is necessary to determine whether fluctuations in the tax rate are temporary or structural.

3. Impairment risk associated with goodwill recognition: The Company recognized ¥0.297B in goodwill during the quarter in connection with the consolidation of KSP-SP Co., Ltd. The purchase price allocation remains provisional, and attention should be paid to future amortization and impairment charges depending on the final accounting treatment and progress against the business plan.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Return

Both the Operating Income margin and Net Income margin exceed the industry median, placing profitability relatively high within the industry.

Growth and Capital Efficiency

The Revenue growth rate is slightly below the industry median, leaving growth at approximately the middle of the industry range.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. Expenses preceding revenue growth: The SG&A ratio rose by +2.6pt from the previous year to 31.9%, contributing to the decline in the Operating Income margin to 11.1%. SG&A growth preceded revenue growth (+7.9%), and future trends in operating leverage will determine profitability.

2. Low earnings progress rates: Progress against the full-year forecast was 21.4% for revenue, compared with only 8.4% for Operating Income and 7.1% for Net Income. Even considering the back-loaded plan, full-year achievement may vary depending on trends in expenses and the tax rate.

3. Expansion of the business platform through M&A: During the quarter, KSP-SP Co., Ltd. became a consolidated subsidiary, and ¥0.297B in goodwill was recognized. The realization of future integration benefits, including the provisional nature of the purchase price allocation, will affect financial indicators.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥179–¥190 at ±1% for the cost of equity, and ¥184–¥185 at ±0.1 for ω.

Note:

• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-06 / This value does not predict or guarantee the future share price)

---

This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific stock. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting a professional as necessary.

---End of Report---